Naira depreciation threatens Nigeria’s 2025 budget plan

EMMA UJAH FROM VANGUARD 

A tough fiscal year 2025 appears to be underway following the tall order in currency valuation which may restrict the capacity of the Federal Government to fund the new budget.

This reduction in real value is due to the significant devaluation of the Naira in the last one year and financial experts believe if this situation is not reversed or improved, the N49.7 trillion proposed by President Bola Tinubu will not be able to provide goods and services that the N28.777 would have achieved at the end of the current 2024 budget implementation.

Already, the new forex policy of the Central Bank of Nigeria, CBN, designed to ensure the appreciation of the local currency succeeded in improving the value only for one week, only for the gains to reverse the following week up till last weekend.

In December 2023, the Naira exchange rate against the dollar was about N853/$1. The exchange rate movement has largely been against the local currency ever since, which President Tinubu told the National Assembly was in the region, N1,700 $1. The Nigerian Foreign Exchange Market (NFEM) rate on the website of the Central Bank of Nigeria as of December 21, was N1,536.93/$1.

Inflation and the Naira Exchange Rate remain two key variables in the macro-economic management that have remained intractable over the years.